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Last week's tip covered some ways to analyze the overhead costs incurred by a practice when a vision plan is accepted. That information is a basic part of evaluating the profit margin, but there are many other considerations that arise with vision plans. This two part article on vision plans was prompted by some excellent questions from a reader, so I'll use a Q and A format for this article.
If I have less than X% of appointment slots filled, should I consider taking all or some vision plans?
Yes. I'm not sure what X is but I don't think we really need to know, exactly. If you have any appointment slots on today's schedule (the current day), then vision plans make some sense because some profit is better than no profit. I covered the open appointment factor last week, but I think it's key to any decision about vision plans.
Should I accept no insurance plan which reimburses less than X% of my usual and customary charges?
Yes, I think it is smart to have some minimum standards for fees. Some plans are just so poor that they really are close to a break-even situation when you consider the time and overhead costs and that is never acceptable. How to decide what the minimum standard should be will vary from one practice to the next. Many offices use a major vision plan as the minimum standard.
If the reimbursement on optical products and the profitability on lens and frame options are better than the exam reimbursement, should you take the plan?
Maybe. I would look at the whole package and project that you will dispense glasses to 80% of the people you see (or whatever you think your Rx percentage is) and consider the average total payment. You can verify that the dispensing percentage is what you projected, but I could accept a lower exam fee if I knew the optical profit was better than what other plans offer.
If the area in which you practice is heavily inundated with a prospective plan, should you take it for the mere volume effect?
Probably – unless it is a very poor plan. The volume is worth a lot. But you must be very efficient and highly delegated to make vision plans profitable. Even if vision plans are widely used in your area, I would work to avoid letting them dominate the practice. I would work to attract the private pay sector by providing an upscale office and optical and I would build the medical eye care practice.
Is it possible to have an upscale office if vision plans dominate?
Yes, and I believe this is one of the most common mistakes practitioners make. The revenue from vision plans alone may not be sufficient to foster a high tech, large, well-staffed office, but you should still invest in building that type of practice anyway. It's possible to have a high fee practice and attract wealthy, private pay patients and still accept vision plans. And many vision plan patients will buy additional products and services if the environment stimulates that.
Is it fair to private pay patients to charge a high exam fee and high optical prices if I accept vision plans that pay much less?
Sure. Vision plans are granted a volume discount in exchange for delivering patients to your office and I don't see any problem with that concept. How much discount you'll accept is a business decision that only you can make. Accepting a volume discount from a vision plan, which is partially prepaid by the patient's employer, does not make your services worth any less. If an individual does not belong to the plan, he should pay the usual fees. Optometrists generally undervalue their services, in my opinion.
What are some factors I should find out about before accepting a plan?
Unfortunately, it may be hard to find out some of the key factors before signing up. I've asked questions like what percentage of my patient population are plan members? Or what major employers in my area provide this vision plan to employees? This information is often not available. Since some vision plan companies offer many different plan designs, it would be nice to know which plans are most prevalent in my area, since that will dictate many details including fees. This is also not readily available.
Other factors of interest include the method and ease of verification of benefits, the claim filing process, frequency of payment, claim rejection rate, optical lab policy, frame inventory requirements, eye exam requirements, discounts required on other services or products, and other administrative requirements.
It may help to know what types of practitioners and modes of practice are eligible to accept the vision plan and who in your area is already a provider.
Should the plan be given a trial period and if so, how long?
I don't believe any plan offers a trial option, although I suppose you could and should implement your own trial by signing up, trying it, and then dropping out if the plan details turn out to be not acceptable (dropping may require 90 days notice). I suppose all plans are on trial all the time.
What if participation in a vision plan is required to join a medical insurance panel?
That could be an important factor in the decision and I would analyze how significant that medical plan is to the practice. The vision plan still must not be a complete loser but the medical plan would be one factor in favor of joining.
Should I consider a “dignity” factor with regard to some plans?
Well, this is really a private feeling of self-respect that a provider may have. I would look at it from a business perspective and not an emotional one, but the plans you don't feel good about will likely be rejected anyway. The public does not really know a bad plan from a good one and their perception of any plan depends on how you and your staff act about it.
How should I weigh the importance of patient volume vs. individual exam fees?
This is the key question all eye care providers should continually ask and there is no easy answer. How full the appointment book is remains central to the decision and as long as it is less than optimum, patient volume is needed. At some point, the vision plan sector can grow so large within a practice that it becomes difficult to serve private pay patients and that would be a sign to me that I should drop one of the lower level vision plans.